SEC Company Response from ARGENX SE (ARGX) (CIK 0001697862) (ARGX) — Apr 21, 2017
ARGENX SE (ARGX) (CIK 0001697862)
Date: April 21, 2017 · CIK: 0001697862 · Accession: 0001104659-17-025205
AI Filing Summary & Sentiment
Reasoning
Referenced dates: April 19, 2017
Letter
VIA EDGAR AND FEDERAL EXPRESS Division of Corporation Finance Washington, D.C. 20549 Attention: Suzanne Hayes Re: argenx N.V. Amendment No. 1 to Draft Registration Statement on Form F-1 Confidentially Submitted April 5, 2017 CIK No. 0001697862
Dear Ms. Hayes:
This letter is being submitted on behalf of argenx N.V. (the “Company”) in response to the comments of the staff of the Division of Corporation Finance (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) with respect to Amendment No. 1 to the Company’s Confidential Draft Registration Statement on Form F-1 submitted on April 5, 2017 (the “Draft Registration Statement”), as set forth in your letter dated April 19, 2017 addressed to Mr. Van Hauwermeiren, Chief Executive Officer of the Company (the “Comment Letter”). The Company is concurrently filing the Company’s Registration Statement on Form F-1 (the “Registration Statement”), which includes changes to reflect responses to the Staff’s comments.
For reference purposes, the text of the Comment Letter has been reproduced herein with responses below each numbered comment. For your convenience, we have italicized the reproduced Staff comments from the Comment Letter. Unless otherwise indicated, page references in the Staff’s comments refer to the Draft Registration Statement, and page references in the responses refer to Registration Statement.
The responses provided herein are based upon information provided to Goodwin Procter LLP by
the Company.
Overview of Our Anticipated Restructuring and Redomiciliation, page 161
1. We note your plans to redomicile from the Netherlands to Belgium following completion of the offering. Please tell us whether you intend to register the offer of securities in the redomiciliation under the Securities Act of 1933. If you do not intend to register the transaction, please tell us the exemption(s) from registration upon which you intend to rely, including the facts supporting your reliance on such exemption(s). Please also provide us with your analysis as to whether the tender offer rules will apply to this transaction.
RESPONSE: The Company advises the Staff that the sole purpose of the potential redomiciliation transaction is to change the Company’s domicile from the Netherlands to Belgium. As such, the transaction is akin to a migratory merger for a domestic corporation, which is expressly deemed not to be an offer or sale within the meaning of Section 2(3) of the Securities Act by virtue of Rule 145(a)(2). Indeed, the proposed transaction would seem to be of a similar nature to the type of transaction contemplated by Securities Act Sections, Compliance and Disclosure Interpretations (C&DIs) 203.06 and 239.04, which state that transactions to change a foreign issuer’s domicile from one political subdivision of a country to another (such as reincorporation from one Canadian province to another) likewise should not be treated as a sale. Similar to a migratory merger from one state to another state within the United States, or from one political subdivision of a country to another, the potential redomiciliation transaction involves a change of the Company’s domicile from one country to another country within the European Union. As such, the Company is of the view that the potential redomiciliation transaction does not involve an offer or sale of its securities.
As with domestic migratory mergers, corporate requirements in the Netherlands do require shareholder approval for the potential redomiciliation transaction. However, the Company advises the Staff that it does not consider the shareholder vote to constitute an “investment decision” for purposes of Section 2(3) of the Securities Act. The Preliminary Note of Rule 145 is instructive in this regard; it reads in part: “The thrust of the rule is that an offer, offer to sell, offer for sale, or sale occurs when there is submitted to security holders a plan or agreement pursuant to which such holders are required to elect, on the basis of what is in substance a new investment decision, whether to accept a new or different security in exchange for their existing security.”
The Company advises the Staff that the potential redomiciliation transaction will not involve the exchange of one security for another security. Rather, subject to board and shareholder approval, the redomiciliation would only result in the transfer of the registered seat of the Company from the Netherlands to Belgium. The Company will remain the same legal entity before and after the redomiciliation, and the underlying ordinary shares will remain unchanged and continue to be held by the same shareholders. Importantly, there would be no change in the Company’s
business or operations, its results of operations or financial position, or its senior managers or board of directors, such that it would require a new investment decision with respect to the Company’s securities.
In connection with the proposed shareholder meeting, the Company will deliver notice of the general meeting to its shareholders, together with disclosures describing the material terms of the redomiciliation. The Registration Statement similarly includes a summary of the material terms of the redomiciliation transaction. From a disclosure standpoint, the Company respectfully advises the Staff that it does not believe registration of the redomiciliation transaction on Form S-4 would provide investors with any additional information beyond what is proposed to be included in the proxy statement for the shareholder meeting.
Because the potential redomiciliation transaction will not involve the exchange of one security for another security, or any of the eight-factors set forth in Wellman v. Dickinson, 475 F. Supp. 783 (S.D.N.Y. 1979), aff’d, 682 F.2d 355 (2d Cir. 1982), the tender offer rules are not implicated.
2. We note that your purpose for the redomiciliation is that value creation is not properly aligned with your intellectual property ownership structures as required under the Base Erosion and Profit Shifting project of the Organization for Economic Co-operation and Development, and that you face a compliance burden as a company existing under Dutch law with shares listed on Euronext Brussels. Please disclose the potential risks or costs to the company that may occur if you are unable to complete the redomiciliation.
RESPONSE: In response to the Staff’s comment, the Company respectfully advises the Staff that the restructuring that will result in the transfer of intellectual property (and the aligning of value creation and intellectual property ownership structures as required under the Base Erosion and Profit Shifting project of the Organization for Economic Co-operation and Development) is expected to occur prior to the launch of this offering and will no longer be subject to any completion risk.
With respect to other risks or costs to the Company if it is unable to complete the redomiciliation, the Company has revised the disclosure on page 63 in response to the Staff’s comment.
Phase 1 Part of Phase 1/2 Clinical Trial in Patients with Advanced Malignancies Expressing CD70, page 122
3. We note your response to our prior comment 13. Please disclose the definitions used for Grade 3 and Grade 4 drug-related adverse events.
RESPONSE: In response to the Staff’s comment, the Company has revised the disclosure on
pages 126–128 of the Registration Statement.
Collaborations, page 132
License Agreements, page 136
4. We note your discussion in these sections of several collaboration and license agreements. However, you have only filed the patent license agreement with The Board of Regents of the University of Texas System as an exhibit. Please file these agreements as exhibits to the registration statement or tell us why you believe that you are not required to file such agreements pursuant to Item 601(b)(10) of Regulation S-K.
RESPONSE: In response to the Staff’s comment, the Company respectfully advises the Staff that it does not believe these agreements are material contracts under Item 601(b)(10) of Regulation S-K. The Company’s consideration of Item 601(b)(10) of Regulation S-K is summarized below.
Background
Item 601(b)(10)(i) of Regulation S-K defines a “material contract” as a contract made outside of the ordinary course of business which is material to the registrant.
Item 601(b)(10)(ii) of Regulation S-K states that “[I]f the contract is such as ordinarily accompanies the kind of business conducted by the registrant and its subsidiaries, it will be deemed to have been made in the ordinary course of business and need not be filed unless it falls within one or more of the following categories, in which case it shall be filed except where immaterial in amount or significance.”
It is clear that none of the categories set forth in Item 601(b)(10)(ii), subsections (A) (concerning officers and directors), (C) (concerning acquisitions or sale of property) or (D) (concerning material leases) apply to any of the agreements at issue. Subsection (B) states that a contract entered into in the ordinary course of business would be a “material contract” if such contract is a “contract upon which the registrant’s business is substantially dependent, as in the case of continuing contracts to sell the major part of registrant’s products or services or to purchase the major part of registrant’s requirements of goods, services or raw materials or any franchise or license or other agreement to use a patent, formula, trade secret, process or trade name upon which registrant’s business depends to a material extent.”
Contracts Not Made Outside of the Ordinary Course of Business
The Company advises the Staff that none of the referenced collaboration agreements or license agreements were entered into outside the ordinary course of business. As described in the Registration Statement, the Company is a pre-commercial biotechnology company focused on the development of antibody-based therapies for the treatment of severe autoimmune diseases
and cancer. As such, it would be expected to enter into license agreements from time to time in order to secure certain intellectual property rights necessary or advisable for the commercialization of its product candidates, and collaboration agreements with larger biopharmaceutical companies for the development and/or commercialization of its product candidates. Indeed, such agreements ordinarily accompany the business of identifying and developing therapeutic products. Accordingly, the Company respectfully advises the Staff that it does not consider these agreements to satisfy the definition of a “material contract” under Item 601(b)(10)(i) of Regulation S-K.
The Company’s Business is not Substantially Dependent on the Contracts
The Company advises the Staff that it is not substantially dependent on any of the collaboration agreements, nor do the license agreements concern the right to use a patent, formula, trade secret, process or trade name upon which the Company’s business depends to a material extent, for purposes of Item 601(b)(10)(ii) of Regulation S-K. The reasons for this conclusion vary based on the nature of the agreement, so the discussion that follows is organized by category of agreement.
(i) Collaboration Agreements
As disclosed in the Registration Statement, the Company is focused on the development of antibody-based therapies for the treatment of severe autoimmune diseases and cancer, with the strategy of retaining development and commercialization rights to those product candidates it believes it can ultimately commercialize successfully on its own, if approved. Where the Company believes a product candidate might be better served by a larger biopharmaceutical company with greater resources, it intends to enter into customary collaboration agreements. Such agreements enable the Company to more broadly diversify is pipeline of product candidates, and largely offload the product development and commercialization of these product candidates to third parties, thus enabling the Company to primarily focus its product development efforts on its wholly-owned programs. The Company advises the Staff that it would not have pursued development of any of the partnered product candidates in the absence of a collaboration agreement. In accordance with this strategy, the Company has entered into a number of customary collaboration agreements for the selection and development of defined product candidates and, if these product candidates are successful in the clinic, ultimately the commercialization of these product candidates.
The Company advises the Staff that it does not consider itself to be substantially dependent on any of these collaboration agreements, for the following reasons.
· Large number of collaborations and large number of product candidates within those collaborations. The five collaboration agreements described in the Registration Statement
contemplate the development of multiple product candidates, many of which have not even been identified yet. Because drug development is uncertain, the Company and its collaboration partners have intentionally undertaken a portfolio approach to identification, selection and development of product candidates, such that the failure of no one product candidate or no one collaboration would have a material adverse on the Company’s business. The Company advises the Staff that it considers the large number of collaborations to be evidence of large biopharmaceutical companies’ confidence in the potential of the Company’s technology platform and approach. It has not, however, built its core business on the assumption that any one of these programs will be successful.
· Selected product candidates are in the earliest stages of development. Each of the Company’s collaborations are in the earliest stages. In some cases (e.g., Shire), the collaboration continues to focus on target screening with no product candidates identified. Where product candidates have been identified, all but one remain in the pre-clinical phase of development. As is typical of drug development, whether or not these product candidates ever advance to early-stage clinical trials, late-stage clinical trials, regulatory approval or commercialization is uncertain. As would be expected, the Company’s right to receive future payments under these collaboration agreements are more heavily weighted towards regulatory approval and commercial success.
· Commercial licenses not yet exercised. Given the early stage of these collaborations, as noted above, in many cases the collaboration partner has not yet exercised its option to secure commercial rights to these product candidates (e.g., AbbVie, LEO Pharma and Shire). As disclosed in the Registration Statement, these agreements include customary provisions that permit the collaboration partner to secure commercial rights to a product candidate after the product candidate has achieved a pre-defined development milestone. Given the early-stage nature of these programs, such options have not been exercised.
· The Company is not substantially dependent upon future payments under the collaboration agreements. As disclosed in the Registration Statement, the collaboration agreements typically provide for a non-refundable upfront payment to the Company, with the right to receive milestones upon the achievement of defined development, regulatory or commercial milestones. As disclos
Show Raw Text
CORRESP 1 filename1.htm Michael H. Bison 617.570.1933 mbison@goodwinlaw.com Goodwin Procter LLP Counselors at Law 100 Northern Avenue Boston, MA 02210 T: 617.570.1000 F: 617.523.1231 April 21, 2017 VIA EDGAR AND FEDERAL EXPRESS U.S. Securities and Exchange Commission Division of Corporation Finance 100 F. Street, N.E. Washington, D.C. 20549 Attention: Suzanne Hayes Re: argenx N.V. Amendment No. 1 to Draft Registration Statement on Form F-1 Confidentially Submitted April 5, 2017 CIK No. 0001697862 Dear Ms. Hayes: This letter is being submitted on behalf of argenx N.V. (the “Company”) in response to the comments of the staff of the Division of Corporation Finance (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) with respect to Amendment No. 1 to the Company’s Confidential Draft Registration Statement on Form F-1 submitted on April 5, 2017 (the “Draft Registration Statement”), as set forth in your letter dated April 19, 2017 addressed to Mr. Van Hauwermeiren, Chief Executive Officer of the Company (the “Comment Letter”). The Company is concurrently filing the Company’s Registration Statement on Form F-1 (the “Registration Statement”), which includes changes to reflect responses to the Staff’s comments. For reference purposes, the text of the Comment Letter has been reproduced herein with responses below each numbered comment. For your convenience, we have italicized the reproduced Staff comments from the Comment Letter. Unless otherwise indicated, page references in the Staff’s comments refer to the Draft Registration Statement, and page references in the responses refer to Registration Statement. The responses provided herein are based upon information provided to Goodwin Procter LLP by the Company. Overview of Our Anticipated Restructuring and Redomiciliation, page 161 1. We note your plans to redomicile from the Netherlands to Belgium following completion of the offering. Please tell us whether you intend to register the offer of securities in the redomiciliation under the Securities Act of 1933. If you do not intend to register the transaction, please tell us the exemption(s) from registration upon which you intend to rely, including the facts supporting your reliance on such exemption(s). Please also provide us with your analysis as to whether the tender offer rules will apply to this transaction. RESPONSE: The Company advises the Staff that the sole purpose of the potential redomiciliation transaction is to change the Company’s domicile from the Netherlands to Belgium. As such, the transaction is akin to a migratory merger for a domestic corporation, which is expressly deemed not to be an offer or sale within the meaning of Section 2(3) of the Securities Act by virtue of Rule 145(a)(2). Indeed, the proposed transaction would seem to be of a similar nature to the type of transaction contemplated by Securities Act Sections, Compliance and Disclosure Interpretations (C&DIs) 203.06 and 239.04, which state that transactions to change a foreign issuer’s domicile from one political subdivision of a country to another (such as reincorporation from one Canadian province to another) likewise should not be treated as a sale. Similar to a migratory merger from one state to another state within the United States, or from one political subdivision of a country to another, the potential redomiciliation transaction involves a change of the Company’s domicile from one country to another country within the European Union. As such, the Company is of the view that the potential redomiciliation transaction does not involve an offer or sale of its securities. As with domestic migratory mergers, corporate requirements in the Netherlands do require shareholder approval for the potential redomiciliation transaction. However, the Company advises the Staff that it does not consider the shareholder vote to constitute an “investment decision” for purposes of Section 2(3) of the Securities Act. The Preliminary Note of Rule 145 is instructive in this regard; it reads in part: “The thrust of the rule is that an offer, offer to sell, offer for sale, or sale occurs when there is submitted to security holders a plan or agreement pursuant to which such holders are required to elect, on the basis of what is in substance a new investment decision, whether to accept a new or different security in exchange for their existing security.” The Company advises the Staff that the potential redomiciliation transaction will not involve the exchange of one security for another security. Rather, subject to board and shareholder approval, the redomiciliation would only result in the transfer of the registered seat of the Company from the Netherlands to Belgium. The Company will remain the same legal entity before and after the redomiciliation, and the underlying ordinary shares will remain unchanged and continue to be held by the same shareholders. Importantly, there would be no change in the Company’s 2 business or operations, its results of operations or financial position, or its senior managers or board of directors, such that it would require a new investment decision with respect to the Company’s securities. In connection with the proposed shareholder meeting, the Company will deliver notice of the general meeting to its shareholders, together with disclosures describing the material terms of the redomiciliation. The Registration Statement similarly includes a summary of the material terms of the redomiciliation transaction. From a disclosure standpoint, the Company respectfully advises the Staff that it does not believe registration of the redomiciliation transaction on Form S-4 would provide investors with any additional information beyond what is proposed to be included in the proxy statement for the shareholder meeting. Because the potential redomiciliation transaction will not involve the exchange of one security for another security, or any of the eight-factors set forth in Wellman v. Dickinson, 475 F. Supp. 783 (S.D.N.Y. 1979), aff’d, 682 F.2d 355 (2d Cir. 1982), the tender offer rules are not implicated. 2. We note that your purpose for the redomiciliation is that value creation is not properly aligned with your intellectual property ownership structures as required under the Base Erosion and Profit Shifting project of the Organization for Economic Co-operation and Development, and that you face a compliance burden as a company existing under Dutch law with shares listed on Euronext Brussels. Please disclose the potential risks or costs to the company that may occur if you are unable to complete the redomiciliation. RESPONSE: In response to the Staff’s comment, the Company respectfully advises the Staff that the restructuring that will result in the transfer of intellectual property (and the aligning of value creation and intellectual property ownership structures as required under the Base Erosion and Profit Shifting project of the Organization for Economic Co-operation and Development) is expected to occur prior to the launch of this offering and will no longer be subject to any completion risk. With respect to other risks or costs to the Company if it is unable to complete the redomiciliation, the Company has revised the disclosure on page 63 in response to the Staff’s comment. Phase 1 Part of Phase 1/2 Clinical Trial in Patients with Advanced Malignancies Expressing CD70, page 122 3. We note your response to our prior comment 13. Please disclose the definitions used for Grade 3 and Grade 4 drug-related adverse events. RESPONSE: In response to the Staff’s comment, the Company has revised the disclosure on 3 pages 126–128 of the Registration Statement. Collaborations, page 132 License Agreements, page 136 4. We note your discussion in these sections of several collaboration and license agreements. However, you have only filed the patent license agreement with The Board of Regents of the University of Texas System as an exhibit. Please file these agreements as exhibits to the registration statement or tell us why you believe that you are not required to file such agreements pursuant to Item 601(b)(10) of Regulation S-K. RESPONSE: In response to the Staff’s comment, the Company respectfully advises the Staff that it does not believe these agreements are material contracts under Item 601(b)(10) of Regulation S-K. The Company’s consideration of Item 601(b)(10) of Regulation S-K is summarized below. Background Item 601(b)(10)(i) of Regulation S-K defines a “material contract” as a contract made outside of the ordinary course of business which is material to the registrant. Item 601(b)(10)(ii) of Regulation S-K states that “[I]f the contract is such as ordinarily accompanies the kind of business conducted by the registrant and its subsidiaries, it will be deemed to have been made in the ordinary course of business and need not be filed unless it falls within one or more of the following categories, in which case it shall be filed except where immaterial in amount or significance.” It is clear that none of the categories set forth in Item 601(b)(10)(ii), subsections (A) (concerning officers and directors), (C) (concerning acquisitions or sale of property) or (D) (concerning material leases) apply to any of the agreements at issue. Subsection (B) states that a contract entered into in the ordinary course of business would be a “material contract” if such contract is a “contract upon which the registrant’s business is substantially dependent, as in the case of continuing contracts to sell the major part of registrant’s products or services or to purchase the major part of registrant’s requirements of goods, services or raw materials or any franchise or license or other agreement to use a patent, formula, trade secret, process or trade name upon which registrant’s business depends to a material extent.” Contracts Not Made Outside of the Ordinary Course of Business The Company advises the Staff that none of the referenced collaboration agreements or license agreements were entered into outside the ordinary course of business. As described in the Registration Statement, the Company is a pre-commercial biotechnology company focused on the development of antibody-based therapies for the treatment of severe autoimmune diseases 4 and cancer. As such, it would be expected to enter into license agreements from time to time in order to secure certain intellectual property rights necessary or advisable for the commercialization of its product candidates, and collaboration agreements with larger biopharmaceutical companies for the development and/or commercialization of its product candidates. Indeed, such agreements ordinarily accompany the business of identifying and developing therapeutic products. Accordingly, the Company respectfully advises the Staff that it does not consider these agreements to satisfy the definition of a “material contract” under Item 601(b)(10)(i) of Regulation S-K. The Company’s Business is not Substantially Dependent on the Contracts The Company advises the Staff that it is not substantially dependent on any of the collaboration agreements, nor do the license agreements concern the right to use a patent, formula, trade secret, process or trade name upon which the Company’s business depends to a material extent, for purposes of Item 601(b)(10)(ii) of Regulation S-K. The reasons for this conclusion vary based on the nature of the agreement, so the discussion that follows is organized by category of agreement. (i) Collaboration Agreements As disclosed in the Registration Statement, the Company is focused on the development of antibody-based therapies for the treatment of severe autoimmune diseases and cancer, with the strategy of retaining development and commercialization rights to those product candidates it believes it can ultimately commercialize successfully on its own, if approved. Where the Company believes a product candidate might be better served by a larger biopharmaceutical company with greater resources, it intends to enter into customary collaboration agreements. Such agreements enable the Company to more broadly diversify is pipeline of product candidates, and largely offload the product development and commercialization of these product candidates to third parties, thus enabling the Company to primarily focus its product development efforts on its wholly-owned programs. The Company advises the Staff that it would not have pursued development of any of the partnered product candidates in the absence of a collaboration agreement. In accordance with this strategy, the Company has entered into a number of customary collaboration agreements for the selection and development of defined product candidates and, if these product candidates are successful in the clinic, ultimately the commercialization of these product candidates. The Company advises the Staff that it does not consider itself to be substantially dependent on any of these collaboration agreements, for the following reasons. · Large number of collaborations and large number of product candidates within those collaborations. The five collaboration agreements described in the Registration Statement 5 contemplate the development of multiple product candidates, many of which have not even been identified yet. Because drug development is uncertain, the Company and its collaboration partners have intentionally undertaken a portfolio approach to identification, selection and development of product candidates, such that the failure of no one product candidate or no one collaboration would have a material adverse on the Company’s business. The Company advises the Staff that it considers the large number of collaborations to be evidence of large biopharmaceutical companies’ confidence in the potential of the Company’s technology platform and approach. It has not, however, built its core business on the assumption that any one of these programs will be successful. · Selected product candidates are in the earliest stages of development. Each of the Company’s collaborations are in the earliest stages. In some cases (e.g., Shire), the collaboration continues to focus on target screening with no product candidates identified. Where product candidates have been identified, all but one remain in the pre-clinical phase of development. As is typical of drug development, whether or not these product candidates ever advance to early-stage clinical trials, late-stage clinical trials, regulatory approval or commercialization is uncertain. As would be expected, the Company’s right to receive future payments under these collaboration agreements are more heavily weighted towards regulatory approval and commercial success. · Commercial licenses not yet exercised. Given the early stage of these collaborations, as noted above, in many cases the collaboration partner has not yet exercised its option to secure commercial rights to these product candidates (e.g., AbbVie, LEO Pharma and Shire). As disclosed in the Registration Statement, these agreements include customary provisions that permit the collaboration partner to secure commercial rights to a product candidate after the product candidate has achieved a pre-defined development milestone. Given the early-stage nature of these programs, such options have not been exercised. · The Company is not substantially dependent upon future payments under the collaboration agreements. As disclosed in the Registration Statement, the collaboration agreements typically provide for a non-refundable upfront payment to the Company, with the right to receive milestones upon the achievement of defined development, regulatory or commercial milestones. As disclos